Natural Gas: America’s Abundant Resource - Heating our homes - Generating more electricity - Reviving U.S. manufacturing - Fueling transportation - Creating American jobs Natural Gas Roundtable Congressional Briefing – September 18, 2013

2 Scott Morrison - APGA Government Affairs Manager Erik Milito – API Director, Upstream and Industry Operations Randall Luthi - NOIA President Don Santa INGAA President Jeff Schrade - NGSA Director, Government Affairs David Sweet WADE Executive Director

3 Natural Gas Has Many Uses Natural gas heats homes million Americans use it at home - 71 million U.S. homes and businesses use natural gas Natural gas increasingly used to generate electricity  In 2002, natural gas provided 16 percent of U.S. electric generation  In 2011, natural gas provided 31 percent Natural gas is also used in the manufacturing, chemical and fertilizer industries

4 Natural Gas: Good news for U.S. Manufacturing New projects

LNG Exports 5  Natural gas becomes liquid when chilled to -260ºF  Chilling shrinks it 600 times – making it easier to transport  LNG is… -Cold, clear, and colorless -Non-toxic, non-corrosive and non-explosive  22 export facilities have been proposed to export LNG to non-free trade countries - 4 LNG export facilities have been approved so far

Natural gas: Good news for the Environment 6 “Greater use of natural gas in early 2012 resulted in the lowest U.S. carbon emissions since 1992” U.S. Energy Information Administration, August 1, 2012

7 Shale Changed the Game  Improvements in technology brought down production costs  Shale gas production quadrupled between 2006 – 2012 and is poised to comprise more than 40% of U.S. gas production in 2020  Diversity of supply complements strong and growing pipeline system, reduces vulnerability to hurricanes, brings natural gas closer to consumers Gas Production by Type Through 2040 Source: EIA Annual Energy Outlook 2013

8 Technology Makes It Possible  Drilling technology improvements and efficiencies in shale have emerged  Longer horizontal laterals  Multiple-stage hydraulic fractures per lateral  Small surface footprint for multiple, extended wells  Ground water separated by thousands of feet and tons of impermeable rock and protected by state and federal regulation  Significant amount of water is recycled  “Micro-seismic” technology evolving and enabling even greater precision in fracturing wells Source: American Petroleum Institute

9 Abundant shale widespread across U.S. U.S. Gas Reserves Increased 22% between 2006 – 2009 Primarily Due to Shale Development Source: Energy Information Administration based on data from published studies Updated: May 2011

10 Natural gas production has shifted Part of the reason Federal drilling permit 2005 – 154 days Federal drilling permit 2011 – 307 days State drilling permit average – 12 to 15 days

11 Positive News for the Economy America’s New Energy Future: The Unconventional Revolution and the Economy, IHS, October 23, 2012 Total Supported Employment 2.1 million jobs supported in million jobs supported in 2025 Including 515,000 manufacturing jobs - Jobs tend to high quality and high paying $35/hr vs. $23/hr in general economy Capital Expenditures $121 billion in 2012, rising to $240 billion by $2.75 trillion cumulative between 2012 and 2025 Gross Domestic Product Impact $284 billion in value added contributions in Increases to $533 billion / year in 2025 Federal and State Government Revenues $74 billion in Increases to $240 billion in 2025 Average Increased Disposable Household Income via Lower Energy Prices $1,200 in 2012, rising to $3,500 in 2025

Natural Gas Industry: Highly Regulated Regulated by state and federal agencies  Clean Water Act – surface water discharge, storm water runoff  Clean Air Act – air emissions throughout production to usage  Safe Drinking Water Act – underground injection disposal/reuse of produced water and flowback fluids  Federal Land Policy and Management Act – permitting for federal onshore resources  Outer Continental Shelf Lands Act – permitting for federal offshore resources  National Environmental Policy Act – permits and environmental impact statements  Occupational Safety and Health Act – requires information about chemicals used at every site  Emergency Planning and Community Right-to-Know Act – annual reporting to emergency responders of chemicals stored and used above certain quantities  Extensive State Oversight – implement federal laws and regulate drilling fluids and produced water management  Detailed state regulatory information available at 12

13 Natural gas estimates keep growing  Estimates have grown significantly with improvements in technology If the 1966 estimate of 600 trillion cubic feet (Tcf) had remained static, the U.S. would have run out of natural gas about 10 years ago  Estimates have been conservative – history shows there is more to be discovered

14 Pipeline System Extensive and Expanding at Record Pace  Between 2000 and 2010, FERC approved more than 16,000 miles of new interstate pipeline - Capacity to move an additional 113 bcf per day  Pipeline system connects U.S. with Canada and Mexico  Storage capacity grew 22% from  Half of new storage is flexible high-turnover salt domes closer to customers

U.S. Natural Gas Infrastructure: Anticipated Investment Through 2035 Source: INGAA Foundation’s North American Natural Gas Midstream Infrastructure Through 2035 $205B in midstream infrastructure investments 125,000 jobs every year for 20 years $57B in federal, state & local tax revenue s ince 2005, pipeline avg. cap/ex: $8.8 Billion/yr 15

Off Limits Under Federal Law or Moratorium Available for Energy Exploration but closed to leasing due to current Federal Policy Available for Production & Exploration Offshore access is the key

Estimated Offshore Resources We still have a lot out there 17

Natural Gas Vehicles  A growing NGV market addresses a number of America’s priorities: Foreign oil displacement Urban pollution reduction Jobs Balance of trade  20-25% of transit buses on US roads are natural gas powered, and last year over 50% of trash trucks purchased were NGVs  The biggest driver is… cost savings 18 Propane – from natural gas processing - is also used to fuel vehicles

19  Tax-exempt financing is the primary method by which cities and towns finance infrastructure  Potential Efforts to alter the current system: Eliminate Tax-exempt financing Reduce benefits to wealthy individuals of purchasing municipal bonds Tax exempt financing

20 To Continue to Make Good things happen… Industry is Committed to Good Stewardship  Listening to and addressing community concerns  Use of stringent industry and government standards on land reclamation, well construction, water management and pipeline safety  Responsible hydraulic fracturing practices  Minimizing surface effects on land and infrastructure  Offshore safety and spill containment

21 … And Government Must Do Its Part As Well  Fair access to onshore and offshore resources  Continued strong and effective state regulation of hydraulic fracturing  Level playing field: avoid picking winners and losers through mandates  Tax policy must be fair, not burdensome, and compatible with resource development and job creation  Financial regulations must not create “economic drain” on investment  Provide regulatory environment compatible with pipeline infrastructure investment and safe, reliable operation

22 American Petroleum Institute (API) 1220 L Street, NW Washington, DC American Public Gas Association (APGA) 201 Massachusetts Avenue, NE, Ste C-4 Washington DC Interstate Natural Gas Association of America (INGAA) 20 F Street, NW, Suite 450 Washington, D.C National Ocean Industries Association (NOIA) 1120 G Street, NW Suite 900 Washington, DC Natural Gas Supply Association (NGSA) 1620 I Street, NW, Suite 700 Washington, DC World Alliance for Decentralized Energy (WADE) th Street, NW Washington, DC, (202)